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Head gasket failure causing oil in the cooling system is quite common on old TU pugs.
Removing the radiator is a pig of a job due to the lower rad hose fitting.The hose has plastic "hooks",a ring to turn,a O ring,a stupid idea and is very difficult to get at,so best left alone.??
There are lots of cooling system flushes on the market but for engine oil contamination I`ve used engine cleaner/degreaser.The sort that washes off with water.
Fill the rad with 2-3 pints of the stuff and run the engine for a while.Then remove the top rad hose (simple hose clips) and thermostat housing and give it a blast with a hose pipe.One or two treatments like that should do the job.
When refilling with fresh coolant there are three bleed valves to open.
top near side of the radiator,small brass allen screw in the thermostat housing,
small plastic screw where the heater hoses fit to the bulk head.

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Hi thanks for the reply so I add the flush to the contaminated water then run the engine for how long then also how do I bleed the system using the 3 bleed locations. Also if I don't get all the air out am I likely to blow the headgasket again
Thanks again for reply

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There should be a drain tap on bottom n/side of the rad.
We never have a problem bleeding 306`s.Just slacken them off and fill up,when there is a nice flow of water from each tighten up.Fill up to correct level,run engine with rad cap off,slacken the one on the stat` and the heater hose one at a time just to make sure all air is out. Top up,fit rad cap and run engine till fan cuts in.Leave to cool and check level.

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Hi thanks again for your reply you have been very helpful how long would you say I need to run the engine with the degreaser added to the coolant. Also do you know what the normal operating temperature should be so I know if i have done it correctly

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Flush it for as long as you like,at least until fully warmed up,the stat` has opened and the rad` hot.The cooling system is then fully circulating.

"normal?" operating temp` can vary,but I would say around 90 driving in average conditions.Obviously it will rise in traffic until the fan cuts in.
Another indication that the cooling system is operating normally is after the fan cuts in,it then cuts OUT,telling you the water is circulating and cooling the cylinder block.

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When you have cleaned out the system refill with a 50/50 solution of antifreeze.
Not to stop the block freezing, but because antifreeze contains additives to help inhibit electrolytic reactions between aluminium and iron. Failure to do this can result in cylinder head erosion that may end up with a junk head.

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Hi thanks for the advice I probably would of done that anyway as I have done this before on a Ford just never a Peugeot so just thought I'd grab some advice before attempting it. Really appreciate everyones help on this forum. Some clever people around. Cheers guys I'll post back the end result once I have flushed it all out

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Hi so today I have got round to emptying the cooling system I only done it once to get rid of the worst but im going to do some more flushes to completely get rid of the contamination.

Old Pug I followed your steps and would like to thank you for taking the time to write everything you did and therefore I thought I would post back the end result.

Bleeding the system wasn't as hard as I was expecting, however I couldn't get the water to run freely out of the bleed points as was filling it up so I improvised and blew down the expansion tank to force the water round until it come out of the bleed point on the radiator then I closed it then waited for it to come out of the thermostat bolt and closed it and the same with the heater pipes.
Then started it up and open the mentioned two bleed points again and it seems to be fine. I does take a lot longer to warm up now which is better as it used to heat up in 2-3 mins.
Also after looking endlessly I didn't have the mentioned drain tap on the radiator and therefore had no choice but to remove the bottom pipe but I got it back on eventually it was a nightmare to get it back on all the way couldn't get it to go the last 2mm.
Also removed the top hose and put in the hosepipe and let it run out of the bottom pipe to clean the radiator a bit.

My only 2 concerns:
Now im done im just wondering after I have switched off the engine if I squeeze the pipe going to the top of the radiator it feels empty it dosent feel like it has any water in it is this normal.
And also after a flush is it normal to hear water rushing behind the center console for a few seconds when I rev it up. it only happened once I guess this was the new water going into the hater matrix.

Ever since ive had the car, it has been quite hard to change gears. You have to give quite some force to get into some and sometimes it wont let you in at all (but double clutching usually fixes that). Its worst when the car is cold and it gets better as it warms up.
Does anyone know of a...

I have a 1994 peugeot 306 xsi and have a weird problem with my gauges
When i turn up my interior fan speed, my coolant temp goes up and my fuel gauge
I guess its something electrical but i dont really know